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2011 Louisiana sugar: a good harvest and high prices

Louisiana&#39;s 2010/2011 sugarcane harvest faced fewer problems than in recent years.
Farmers won&#39;t have to spend as much prepping fields.
Sugar price driven by consumer preferences, problems with crops around the world.

High sugar prices – prompted, at least in part, by growing demand for “natural sweeteners” -- and a good 2010/2011 sugarcane harvest season have certainly improved Louisiana producers’ collective mood.

“This past harvest was completely different from the 2009/2010 crop,” says Blaine Viator, a veteran south Louisiana consultant in early February. “Then, we had one of the wettest harvests on record – probably the wettest since 2002. Unlike a lot of other sugarcane industries, we can’t stop our harvest when it’s wet. We’re up against the clock because we have to beat the freezes.”

In 2010, “we had record tonnage per acre of cane. Stalks had absorbed a lot of water. That, of course, adds weight but so did the excess mud and trash from the sloppy conditions.

“All that mud causes several problems. The main one, because of the mud and trash, is sugar content of the cane is reduced quite a bit. What happens is, even though there’s higher tonnage in a wet harvest, we see lower sugar content. Growers are paid by sugar-per-acre: the product of the total tons of cane times the sugar content per ton of cane.”

For the latest harvest, Viator says conditions made a sharp divergence from those a year earlier.

“We had a very dry harvest with lower cane weight, for the most part, and the tonnage per acre was down as a state average. However, because it was dry, we had very good sugar content per ton of cane.

“To me, the latest harvest is ideal. Although the tonnage was lower, the sugar content was higher and the actual sugar-per-acre was nearly identical to 2009/2010 as an industry average even though the two yield components were dramatically different.”

An easier harvest means growers “are able to spend much less money on repairing equipment, rutted fields, and turn-rows. They’re also able to finish harvesting earlier in the day. So, the overall cost of this harvest really dropped.”

One thing that came into play both in 2009/2010 and 2010/2011 crops was “consecutive abnormally cold winters in south Louisiana. We had several freezes in December 2009 and we’ve already had several this winter. One is going on as we speak.”

Stubble cane – the newly-emerging cane -- was a worry coming into this year’s crop. It was “slowed severely because of those hard freezes and a cool spring. We really didn’t start getting our cane growth until well into late April and May. Generally, the crop starts growing in late February and March. Luckily, even with the slow start, most of the cane did catch up.”

Yields and ripeners

Overall yields were another “unusual occurrence” with the 2010/2011 crop.

“There was a big discrepancy favoring the more northern area of the sugarcane belt versus the southern parishes along the coastline. That may sound odd because you’d think the farther north the growers are, the more their crops will be impacted by freezes. This year, though, that wasn’t the case.”

Viator says there has been a “constant back-and-forth (argument) in the sugar industry about the use of glyphosate ripeners. Using them is very profitable and probably the most studied practice in our industry. A lot of folks believe the use of glyphosate ripeners throughout the complete crop cycle reduces sugar yields rather than increasing them.

“Contradicting this train of thought is that the growers in the highest-yielding areas have historically been the heaviest users of glyphosate ripeners. The lowest yielding areas were those where glyphosate ripeners have been used the least. There may be no direct correlation but it is interesting.”

Sugar prices

Regarding current sugar prices, Viator says “it’s almost like a perfect storm.

“We’ve seen some of the best prices since 1974. But there are some differences. In 1974, many believed the price increase was artificial with a lot of speculation – not a true supply and demand situation.

“The current situation, most economists say, is much stronger because it’s based on true supply and demand. And some issues have come into play. First -- just as with grains and soybeans several years ago when soybeans went to $15 per bushel – India and China, whose populations are massive, has increased per capita wealth to the point where they can afford beef. That meant a need for grain crops to feed the beef.”

If able to afford beef “they can also afford a candy bar and soda. What is happening is countries that used to be net exporters of sugar have become net importers. On a global basis, that’s shifted the world’s supply and boosted price.”

Added to the mix are “some earlier problems with Brazil’s ports, the largest sugar-producing country in the world, exporting sugar. When they have problems at the ports and logistical issues then world sugar prices are affected.”

More recently, reports are that a cyclone hit the Australian sugar industry, the world’s third largest sugar exporter.

“That has people worried about Australia’s output. And then there are weather concerns in Thailand and Brazil. Plus, there were record freezes in the Florida cane industry. With their harvest yet to be complete, there are some estimates that their production may be reduced as a result. That’s yet to be seen.

“Adding more momentum to the price is the controversial court ruling on GMO sugar beets, which could potentially reduce domestic sugar supply even further.”

All-natural shift

At the same time all the above is happening “we’re seeing an increase in demand for sugar. The American public is trending towards ‘all-natural’ products. Helping sugar even more is that high-fructose corn syrup is being scrutinized by nutritionists and the public on its potential contribution to obesity. Soda companies that were strictly using high-fructose corn syrup are going back to natural sugar, so much so that the high fructose corn syrup producers are petitioning the FDA to change its product name to ‘corn sugar.’ That’s helping push demand for real sugar higher.”

In 2010, “most experts thought high sugar prices would only carry us into early 2011. But with all these things happening at once, a lot of us now think we’ll see very good prices into next year’s crop.

“Something that’s helped is traditionally the sugar industry here has produced raw sugar. That is then sold to a refinery, which refines it into pure, granulated cane sugar.

“Recently, some of the sugar industry down here has vertically integrated and purchased ownership into the refineries. That has passed down some of the profits of the refined sugar market to producers and raw sugar millers. That’s really helped us – to capture some of those refining market dollars. Some years, there have been extremely low raw sugar prices while refined sugar prices were much higher. Now, we should be able to better handle the low raw sugar price years.”

NAICC

Viator was recently named president-elect of the National Alliance of Independent Crop Consultants (NAICC).

“NAICC has done a lot of membership polling over the last year. The organization really wanted to know what our membership needed the most. Included in our group are contract researchers and quality-assurance professionals all working in agriculture.”

A very detailed member survey sought “to get a handle on what the membership thought was the major role of NAICC in representing the independent crop consultants and researchers on a nationwide basis. One of the biggest things members wanted was a presence in Washington, D.C., to educate not only agriculture-related government employees and organizations but also lawmakers. We need to let them know what our profession is and the role we play. They need to know the considerable amount of expertise our membership has, and if needed, we can be utilized.”

Several years ago, the NAICC began an outreach effort called the ‘Crawfish Boil on the Hill.’

“We do it every March. It’s a very low-key, relaxed reception. No political agendas or issues are discussed.

“We just invite lawmakers and staff to the function and provide crawfish and other Cajun delicacies. They come in and relax and get to know consultants and researchers.

“It has really done a lot for our government affairs and relations in D.C. Last year, we visited some of the government agencies the day prior to the function. Doing that, we learned a lot about the atrazine situation and the possibility of EPA removing it from our toolbox. We learned a lot about the NPDES (National Pollutant Discharge Elimination System) permitting.”

“And then those same people we visited with came and had some crawfish. We get a lot of mileage out of these efforts. We’re excited about continuing that.”

The issues that face the NAICC “are very similar to those facing agriculture in general. NAICC members interface with production agriculture every day. It behooves all that are in the field of agriculture to work together to be sure the public is informed of the importance of our nations’ great ‘Farm Food Factory’ and that our lawmakers, USDA and our regulatory agencies are aware of how their actions affect the day to day operations of our growers.”